DHI Group, Inc. (DHX) Q1 2019 Earnings Report, Transcript and Summary

Good afternoon. My name is Josh and I will be your conference operator today. At this time I would like to welcome everyone to the Q1 2019 DHI Group Earnings Conference Call. [Operator Instructions] Thank you. Todd Kehrli with MKR Investor Relations, you may begin.

Thank you, operator, good afternoon, and welcome to the DHI Group's First Quarter Fiscal 2019 Financial Results Conference Call. With me on today's call are DHI's CEO, Art Zeile; and Chief Financial Officer, Luc Grégoire. Before I turn the call over to Art, I'd like to cover a few quick items. This afternoon, DHI issued a press release announcing its first quarter fiscal 2019 financial results. That release is available on the company's website at dhigroupinc.com. This call is being broadcast live over the Internet for all interested parties, and the webcast will be archived on the Investor Relations page of the company's website. I'd like to remind everyone that on today's call, management will make forward-looking statements that involve risks and uncertainties. Please note that except for the historical information, statements on this call may constitute forward-looking statements within the meaning of section 21E of the Securities and Exchange Act of 1934. When used, the words anticipates, believes, expects, intends, future and other similar expressions identify forward-looking statements. These forward-looking statements reflect management's current views with respect to future events and financial performance and are subject to risks and uncertainties, and actual results may differ materially from the outcomes contained in any forward-looking statements. Factors that could cause these forward-looking statements to differ from actual results include delays in development, marketing or sales and other risks and uncertainties discussed in the company's periodic reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission. DHI undertakes no obligation to update or revise any forward-looking statements. Lastly, during today's call, management will be referring to certain financial measures, including adjusted revenues, adjusted EBITDA and adjusted EBITDA margin, which are not prepared in accordance with U.S. GAAP. Information about and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are available in our earnings release, which is posted on our website at www.dhigroupinc.com in the Investor Relations section. I now turn the call over to Art Zeile, CEO of DHI Group.

Thank you, Todd. Good afternoon, everyone. And welcome to our first quarter fiscal 2019 earnings conference call. We appreciate your interest in DHI. We are pleased to report another quarter of improved financial results, highlighted by year-over-year growth in our ongoing tech-focused revenue. This is a significant milestone because it's the first time that our revenue has grown in several years. At the same time, we continue to deliver solid adjusted EBITDA margins at 23%, a sequential increase of one percentage point. We have done so, while also investing in and launching a new commercial sales team to accelerate revenue growth. As these results demonstrate, we continue to see the positive effects of the sales, marketing and other operational changes we made over the past year as part of the strategic transformation of our business. We have simultaneously strengthened our leadership team with the addition of a new Chief Product Officer, a new Chief Marketing Officer and most recently, a new Chief Technology Officer and Chief Strategy Officer. We have the right team in place to execute on our growth strategy. Now let's talk about some of the progress we made during the first quarter. As I told you, we rolled out a dedicated commercial accounts team to accelerate our efforts to attract new direct hire customers, those customers that have their own internal recruiting teams. These efforts have already resulted in many new customer wins for Dice. Prior to my joining DHI a little over a year ago, the company was focused on maintaining its existing customer base and put little emphasis on customer acquisition. I believe we need to do both in good measure to grow successfully. With the positive results we are already seeing from our commercial accounts team, we intend to incrementally add resources in 2019 to further build on our success. In the first quarter, we also devoted significant effort to refining our marketing channel strategy, which is predominantly geared towards candidate acquisition. We changed our agency relationship, both for paid search and for affiliate programs, and are seeing early signs of improved results. We believe our marketing efforts are at an inflection point, bolstered by the new Chief Marketing Officer, a change in agencies and pivoting to a performance marketing approach. Our improved financial results are a reflection of our comprehensive efforts to improve how we manage the business. However, our future growth and profitability will be driven by delivering on a product strategy to make each of our three brands more effective for clients and more engaging for candidates. As I've described in the past earnings calls, these efforts center on applying the lessons learned from our ClearanceJobs career marketplace to Dice and eFinancialCareers. I'm pleased to report we made significant progress since our last call. For our Dice platform, one of these upgrades was the launch of Candidate Match, which is now in general availability to all our clients with access to the Dice employer portal. Candidate Match uses our proprietary technology skills data model to grade each candidate's skill, experience and relevance against the requirements of a job posting. Applications are automatically scored using sophisticated algorithms, allowing recruiters to quickly rank order their candidates. Candidate Match is a big step forward in our match capability and a demonstration of our commitment to matching algorithms as a core competency and differentiator in our marketplace. Our second important Dice release was the introduction of pay-per-view pricing, which we are offering alongside our current user license model. ClearanceJobs has successfully delivered performance-based pricing for years, and we know that when we offer our clients flexible pricing options, we encourage greater usage. In ClearanceJobs, we have seen increased revenue per customer with this model, and although we are in the early stages of rolling out pay-per-view with Dice, we are seeing a similar pattern emerge. During the first quarter, we also completed the rollout of TalentSearch within IntelliSearch to over 99% of Dice customers. With IntelliSearch in place, we have seen double-digit growth in searches against our historical usage numbers. IntelliSearch also applies our proprietary technology skills data model that maps over 100,000 technology skills and their relationships, allowing clients to search our candidate database using an entire job description rather than a job title and location. It delivers a short list of the most relevant candidates that fit the exact skill set that they are looking for. We also released new important enhancements to our eFinancialCareers and ClearanceJobs platforms in the first quarter. For eFC, we released a new job search capability, which provides an improved search experience for candidates looking for jobs that fit their exact skills and career aspirations. For ClearanceJobs, we introduced a user-generated news feed for candidates called Pulse, which enables a stream of career-focused information from all the recruiters they are connected to. Pulse is part of the ClearanceJobs Next Generation platform we launched on December 28 of last year. Next Gen is a substantial leap forward in delivering a true career marketplace, where employers engage with candidates on opportunities by leveraging robust profiles, live chat, instant messaging and voice over IP communications. We are pleased to note that since this release, every important engagement metric that we track for ClearanceJobs has at least doubled. We believe this early success indicates that the career marketplace features in ClearanceJobs drive incremental usage, which we will ultimately deliver in the form of revenue growth. The key features that differentiate the ClearanceJobs user experience are now part of the product road maps for both Dice and eFinancialCareers. While we have made great strides, we still have a lot of innovation ahead of us. You will see this through meaningful product releases every quarter. In the second quarter, we are delivering our new job search capability to Dice. We are also releasing a new Chrome extension for IntelliSearch. Finally, we will be launching a new recruiter profile and messaging platform in beta for eFinancialCareers. Before I conclude, I want to highlight two new appointments we made to our Board of Directors during the quarter. Max Carnecchia brings more than 20 years of experience leading enterprise software, SaaS and analytics firms, and currently serves as the CEO and Board member of software company Mitek Systems. And David Windley has more than 30 years of human resources experience globally in a range of industries. David was the former Chief Human Resources Officer at Yahoo! and Fusion-io, and currently serves as the CEO of IQTalent Partners, a professional services firm focused on talent acquisition. David is also the Board chair for the Society of Human Resources Management or SHRM. Max and David are excellent additions to the DHI Board as they bring a wealth of industry experience and solid backgrounds as operating executives and Board members of publicly held companies. Max and David will replace John Barter, current Chairman of the Board; and Burton Goldfield, member of the Audit Committee, whose terms expire as of our annual meeting next week. At that time, Skip Schipper will become our new Chairman of the Board. Skip has deep industry experience, having served as the Head of Human Resources at Twitter, Groupon and Cisco Systems. Today, Skip is the Chief People Officer at Yext. I would like to thank both John and Burton for their many important contributions to the strategic direction of the company. I strongly believe our company is in a period of positive change because of their guidance and commitment to the success of our team. In closing, as we continue to successfully execute on our strategic growth plan, our vision remains the same: to create indispensable career platforms where technology professionals connect with the right opportunities and where clients have access to the highest-quality talent. We believe we are delivering the best platforms in the market, and we look forward to reporting on our continued progress throughout the year. With that, let me turn the call over to Luc, who will take you through our quarterly financials, and then we'll take questions you may have. Luc? Luc Grégoire: Thank you, Art, and good afternoon, everyone. As Art mentioned, we're very pleased with our progress this quarter, especially our return to year-over-year growth in our ongoing tech-focused revenues. For those on the call that may be new to our story, since the end of 2017, we divested 4 noncore brands and closed our Dice Europe business. What's left is our 3 tech-focused brands, and as such my remarks and related comparisons on revenues will refer only to these remaining businesses. So jumping right in. For the first quarter, we reported tech-focused revenues of $37.1 million, up 2% year-over-year excluding foreign exchange, and it's the first time in several years that we've seen a year-over-year increase in revenues, reflecting the significant changes we've made over the past year. The improvement we've seen - we're seeing in our tech-focused revenue trends over the past several quarters were driven by improving trends at Dice, another quarter of record revenues in ClearanceJobs and steady eFinancialCareers revenue, excluding foreign exchange. Looking at the brands. Dice revenue was $23.1 million in the quarter, down only $100,000 or 1% year-over-year. This is much improved from Q1 2018, when Dice revenue had declined 10% year-over-year. We're happy with the improved trend we're seeing with Dice and expect the changes we have underway to continue to drive improved performance in this brand, which is important as it makes up a little over 60% of our total revenue. The trend in Dice recruitment package customers has also stabilized, following many years of decline, with the first quarter ending at over 6,100 customers with no major customer loss during the quarter, while our renewal rate on customer count edged up sequentially to 68%. Other improvements to our Dice metrics include our renewal rate on revenue, which increased 700 basis points year-over-year to 81%. Our average monthly revenue per recruitment package customer increased by 2% year-over-year to $1,134 or approximately $13,600 on an annualized basis. We feel these metrics are key as over 90% of our revenues are recurring coming from recruitment package customers with an average contract length of slightly over 12 months. ClearanceJobs' first quarter revenues were $5.8 million, a 20% increase year-over-year and the 13th consecutive quarter with at least 20% growth. This persistent revenue growth underscores ClearanceJobs' strong product innovation and competitive differentiation. For eFinancialCareers, revenue for the quarter was $8.2 million, in line with the prior year quarter, excluding the impact of foreign exchange rates. We saw growth in Asia Pacific, where we continue to see strong demand by the Tier 1 banks and growing penetration of the Tier 2 banks, which represent a substantial pool of potential clients. This growth was offset by some macro headwinds we're seeing in Europe and some competitive challenges in North America. We're currently testing pay-per-view in these markets and looking to progress further down our innovation road map to help address these challenges. Overall, we believe we've reached the turning point and are at the beginning of sustained long-term revenue growth. We expect that our tech-focused businesses will achieve modest year-over-year revenue growth in the first half of 2019 and continue to improve as the year progresses, buoyed by Dice, which is now poised to achieve year-over-year revenue growth in the second half of 2019. Turning to expenses. First year quarter operating - first quarter operating expenses were $33.5 million for a $7.3 million or 18% year-over-year reduction, of which $4.6 million related to our divestitures and $1.5 million was due to the closure of Dice Europe in 2018. The remaining reduction of $1.2 million came from the ongoing tech-focused business. In the first quarter of 2018, our ongoing tech-focused business had a few unique onetime items, including expenses of approximately $2 million for a legal contingency as well as costs related to the CEO transition, partly offset by a $1.2 million commission expense reduction upon implementing the new revenue recognition standard. None of these items recur in 2019. The remainder of the decline in operating expenses came from spending efficiencies. These efficiencies helped us fund increased sales expense as we built out and launched our commercial sales force. As Art mentioned, we're seeing good initial traction from the commercial team, and we intend to incrementally add sales as we progress through 2019. Looking forward to the rest of the year, general and administrative expenses will decline as we have mostly concluded the cost-reduction consulting engagements and are moving to an internal focus of continuous improvement. We'll continue to invest in product development, which should be mostly funded by the efficiencies we found over the last several quarters. Otherwise, first quarter operating expenses are a good proxy for upcoming quarters, and we expect to hold the current adjusted EBITDA margin for the rest of 2019. Tax expense for the first quarter of 2019 was $1.9 million, reflecting an effective tax rate of 54%, which differed from our expected rate of 25% due to discrete tax items in the quarter relating to share-based awards and transition tax driven by final tax reform regulations that were issued in February 2019. Net income for the quarter was $1.6 million or $0.03 per diluted share versus net income of $3.5 million or $0.07 per diluted share a year ago. The current quarter earnings were negatively impacted by disposition-related costs and discrete tax items totaling $1.8 million after-tax or $0.04 per diluted share. Prior year earnings benefited from a gain on sale of businesses, net of disposition-related cost and discrete tax items, for a favorable impact of $400,000 after-tax or $0.01 per diluted share. So on a normalized basis, our diluted earnings per share was $0.07 in the first quarter of 2019 compared to $0.06 for the first quarter of 2018. Adjusted EBITDA for the quarter was $8.5 million for a margin of 23%, which was in line with the first quarter of 2018 when excluding Dice Europe results. We generated $3.8 million of operating cash flow in the first quarter, a decrease of $3.7 million year-over-year. This result was driven primarily by changes we made to the timing and frequency of our billings beginning in the first quarter of last year as well as timing in the settlement of our 2018 year-end payables. We expect operating cash flow to return to more normalized levels for the remainder of 2019. Now let me briefly address a few items on our balance sheet. First, we expect a modest rise to the current run rate of capital expenditures throughout the remainder of 2019 as we continue to invest in innovation. As the end of the quarter, our debt was $17 million, having paid down $1 million during the quarter, and our leverage ratio was about 0.5 adjusted EBITDA. Deferred revenue at the end of the quarter was $61 million as compared to $56.1 million on December 31, 2018. We see this seasonal increase as a return to a more normal pattern of working capital dynamics, and we feel the billing practice changes of last year have now mostly cycled through. With regards to our buyback program, we repurchased approximately 250,000 shares during the first quarter at an average price of $1.96 for a cumulative total of 1.3 million shares at an average price of $1.87 since starting our buyback program last May. As we announced today, our Board of Director has authorized a new $7 million buyback program running through May 2020, which we believe is appropriate even at the current valuation and can also help offset dilutive impact of stock-based compensation. In closing, we're excited by the market opportunity in front of us and confident in our ability to deliver a differentiated user experience across our tech-focused brands for employers and candidates alike. We're equally confident in our ability to grow revenues and deliver on the meaningful operating leverage that's embedded in our business as we begin to benefit from the significant changes we've made so far. And one final point on the investor relations front, Art and I will be participating in a number of investor conferences in May and June. We'll be presenting at the B. Riley FBR Annual Conference on May 23, the 9th Annual LD Micro Invitational on June 4 and 5, and at the East Coast Ideas Conference - Investor Conference in Boston on June 12. We hope to see many of you there. And as always, I'd like to thank you for your interest today. And with that, let me turn the call back to Art.

Thanks Luc. I'd like to close by once again thanking all our employees around the world for their hard work and achievement of our revenue growth milestone. With your focus and commitment, we have begun 2019 with incredible momentum. It is a pleasure to be part of such a great team. And with that, we're happy to take your questions.

[Operator Instructions] Your first question comes from Marc Wiesenberger with B. Riley FBR.

Can you talk about some of the digital marketing strategies that you guys are employing? And how they're resonating with some of their respective cohorts?

Yes, I would say that in general, we have a number of different digital marketing strategies, and they would fall into the channels of paid search, SEO, e-mail campaigns and social and also affiliate campaigns. And so what we have done mostly in the past is focused on one channel specifically, affiliate campaigns, and we've now been able to broaden to all those other channels successfully with the help of an agency that we selected as a result of an RFP process over the last six months. And so we're seeing some really early signs that, that agency has made a big difference, and especially with regard to paid search. That agency came on board quite literally the 1st of February, so in the middle of the first quarter. We would expect to see their impact grow over the course of this year, 2019.

With respect to the impact of IntelliSearch, can you quantify that on the search activity within Dice or provide some more clarity there?

So we've taken our customers through a migration to IntelliSearch in waves. And we've done that out of conservatism, quite frankly, to make sure that the platform itself could manage the throughput. And there have been a total of 6 waves to date. In each one of those waves, we've measured the usage activity of that customer cohort before the change and after. So we have seen, in general, a double-digit increase across all of those waves. Some of those waves have seen 25% to 30% increase in utilization. And I believe it's because we're making the recruiters' jobs easier. The way that I like to describe it when I talk to customers is that if you have IntelliSearch, you're putting an entire job posting into the search area, the search field, which gives a different experience, very different from that of our competitors, which usually ask you to just put in a job title and a location. When you're putting an entire job posting, you essentially get more information to work with and a lot of skills information. So the recruiters get a short list of 10 to 20 very relevant candidates instead of 4,000 hits that say that you have a Java developer in Denver or a PHP developer in Boston. And truly, we have found recruiters want to have a shorter list of more relevant candidates to work with than have a really long list, where they have to sift through the resumes and try to make sense of them.

I know you talked about the performance-based pricing. Can we get some kind of expectations on potential uplift maybe throughout the year? Or - and you how see that maybe driving some incremental revenue growth?

Absolutely. So it's pretty early stage for us to make any kind of forecast predictions, but I can tell you that we've rolled out pay-per-view to both Dice and eFC this first quarter, and we primarily used it as a tool for new customer engagement. We have used it less so for purposes of essentially renewals. But there are certain circumstances where we pitch the idea of pay-per-view when we believe that that'll be revenue accretive. What we have seen so far in the number of logos that - the number of customers that have essentially taken that format is that it has been net-net revenue accretive for us. So we do believe that it's going to impact revenue positively over the course of 2019, but it's a little bit too early to predict what that means on a percentage or an actual dollar basis.

I think previously, you've talked about the Matchback program and one of your initiatives to try to be able to show recruiters that you are adding value and get that attribution to helping place candidates. Have you had any more success with that program? And as well as being able to quantify attribution for recruiters?

Yes, in fact, we're constantly evolving that program. And the way that I would describe it is that it was originated in eFinancialCareers, and specifically with our Asia PAC region. So think of it as working with the larger banks in Hong Kong and Singapore. And we have had that program in place for over a year now. We have encouraged multiple customers to use Matchback and have done that successfully, shown it - shown the value of the eFinancial platform to those customers. We are now moving that to Dice. And so really the prototype has been proven by eFinancialCareers in specifically that region, and we're trying to spread it to the rest of our 3 platforms. But I can - suffice to say that if the - in the cases where we have actually run the Matchback experience and program with these customers, we've shown tremendous value.

In addition to the $7 million stock purchase plan that was put in place, can you talk about some of the priorities with regards to capital allocation and uses of cash going forward? Luc Grégoire: Yes, this is something we've consistently talked about, and our capital allocation strategy really hasn't changed. We want to continue to support the company's turnaround. And beyond that, I think near term, we would continue to pay down our revolver. Given the revolver nature of it, we can always bring back the liquidity that comes in that. And then we are looking - we've been focused mostly on reinforcing our core internally, but to the extent we could find some opportunities externally that would help us accelerate our strategy, we would keep some for that. And then should we have it - that excess identified, then we would go - we'd probably consider returning capital to shareholders. So that's - basically we've been consistent with that. This is much more an efficiency play for us given where the stock price is, and to help us offset the dilution of stock comp.

And I guess just one more from me, kind of big picture. As you think about the evolution of all 3 platforms, is there any technology out in the marketplace that excites you and that you might want to look to integrate that can be leveraged across the platforms? And I don't mean necessarily a large acquisition, but kind of very targeted technology that would kind of enhance what you're already doing well or provide you a differentiated approach?

So that's a great question. And I can tell you, Marc, that what I believe is the real core competency that we have as a company is our data model that basically categorizes over 100,000 different technology skills. And what's happening behind the scenes when a client does a job posting search for candidates or a candidate is looking for jobs that are relevant for their career is that we're going deep into that data model and matching skills. And in a typical job posting in the technology world, there would be like 20 to 30 different skills, and we're just at the tip of the iceberg, in my opinion, of building and evermore elegant model to get deeper and deeper in understanding technology skills, understanding the nature of the job posting requirements in more detail. So anything that helps us from an AI perspective, a data science perspective, really getting into that nature of understanding skills at a depth even beyond what we've noted today would be really intriguing to us. Now when I say that, I can tell you that we also have had a very mature data science team in place for 7 to 8 years that have been working on that model. So if we find that really unique opportunity, I'd like to engage with that particular company and understand whether or not they could be a partner or acquisition candidate, but we do have a very mature data model as it stands today.

Your next question comes from Josh Vogel with Sidoti & Company.

I guess my first question is, we saw the number of recruitment package customers decline by 100 sequentially, now that's after several quarters of flattening out around 6,200. I was just wondering if this was mostly because of the move you made or the moves you're making to the sub-segment of clients to pay-per-view? Luc Grégoire: Yes. I'd say, actually, we see this as a stable point. There is some seasonality in our business, and the biggest book of renewal happens in the fourth quarter and the first quarter. And we still have - we do have 20% churn, so that creates a bigger bug. But if you compare that to last year, you could see that in the earnings release that the metrics are there. We were down 250 sequentially last year. So now this year, because we round these numbers, we're actually down about 60. So we view that as a significant improvement on that trend and expect to be back in that 6,100, 6,200 level for the near term.

And we also - look, Josh, at the lower-level information associated with the size of those customers, the type of industries. And I'm actually encouraged because we didn't lose any very large customers. As we're all aware, the SMB part of the customer universe is one where the customers might actually leave the part - the relationship for reasons that are completely unrelated to the value of the product. It could just be a failed business or they might be cutting back on expenses, a number of different reasons. But the customers that we saw - the 60 approximate customers that left were relatively small in nature. And we're always looking to improve the quality of the customer base, not just the quantity.

Art, you've talked in the past about several white spaces and opportunities for growth. And I was wondering if maybe you could delve into some of these again, maybe update us as to where you are with regards to some of these opportunities. I know about the - we know about the commercial accounts, even direct hire, maybe, for example, pursuing government contracts directly and any other opportunities that you deem as white spaces.

Absolutely. In fact, obviously, there's a different story for each one of our brands. I do believe that for Dice, the biggest two white-space opportunities are to bring the platform to parity with CJ's capabilities, ClearanceJobs' capabilities, to make it a true career marketplace, but in addition to that, to really get more specialization in terms of our sales efforts, and that is what the commercial accounts team really represents. We will incrementally grow that team over the course of this year as we see more and more success. For eFinancialCareers, again, the platform being brought to the same level of capability as ClearanceJobs is priority number 1. But Luc expressed that we're seeing really positive growth trends in the Asia-Pacific region of our eFinancialCareers platform. They're double-digit growth trends. And we basically attend to the very top-tier banks in both Hong Kong, Singapore, in that region generally. We're actually moving to the second-tier banks because we feel like there's a lot more of those numerically. They're relationships that we really never attended to historically. We're actually adding people to those sales teams in that region. For ClearanceJobs, obviously, they've sustained 20%-plus growth year-over-year for multiple quarters. They're doing a wonderful job. They're led by a gentleman that is named Evan Lesser, who has been a product visionary in this market. We have really never attended to the government space, and that is to say that less than 1% of our revenues for ClearanceJobs come from contracts with government agencies. Last year, we essentially hired a consultant to look at and map out the government agencies and understand more about their hiring needs for technology professionals. We prioritized those agencies. This year, that same consultant is helping us opening doors in the form of meetings and start to put together proof-of-concepts to test the system within the government - within the federal government. So I think we're going to see some level of success, we're hopeful that we're going to have some level of success by building relationships with direct government customers for ClearanceJobs over the course of 2019.

We've seen other companies discuss the environment overseas, where their clients are basically sitting on their hands, waiting for Brexit to play out. So business activity and hiring in general have slowed in prior quarters. So as Brexit or the idea of Brexit continues to get pushed back, are you seeing any impact on your eFC business, in particular? I'm curious of what the average dialogue sounds like with your clients over there. Are they just starting to say forget about Brexit, let's just get back to business as usual?

I would say that we're still seeing some amount of headwind for the U.K. market specifically. But we attend to multiple markets in Europe, and in fact, we have an office in Frankfurt. So there's been a pickup of activity in Frankfurt and other geographies like Paris, France. With the U.K., I would say the headwinds are balanced against a macro theme that the banks have very difficult times convincing technology professionals to come on board. So they still need help with regard to that and the recruitment activity around technologists is still very high. With that said, there's no question that the sales team says, "Hey, a lot of people are taking a slower approach right now to the way that they're looking at the sales cycle." So I think that it is valid for the U.K. market.

And then just a couple quick ones for Luc. Recently or last quarter - or for 2018, you discussed some liberalization of customer terms, which impacted, I think, like deferred revenue and accounts receivable, is that fully adjusted now? And with regards to those items, just expect to get back to normal cash flow trends? Luc Grégoire: Yes, I think that we've cycled through. The end of 2017 into '18 is where we saw a big slowing down, and we went from 96% of our annual contracts selected up front to about 83%, 80%, and that's held at that point. So a year later - and you can see that if you look at our financial statements. You'll see that we're actually showing higher deferred revenues, higher receivables at the end of the first quarter than we did at the end of the year. If you look at it last year, you'd see the opposite flow, and that's the reflection of the adjustments. So I think the working capital is adjusted. That cash - when you look at the cash flow, same thing. If you look at the cash earnings, they've been pretty steady and we really expect to get back to our 70%, 80% of adjusted EBITDA in terms of operating cash flow generation going forward.

And just lastly, outside of those discrete tax items, should we expect the tax rate over the balance of the year to be in line with your commentary from - following 2018 results, like in the mid-20% range? Luc Grégoire: Yes, we've mentioned we expect 25%, we still expect that, except for obviously, you get these discrete tax items, which are noncash. You set up the benefit on a noncash basis and it adjusts on a noncash basis. So from that standpoint, I think it - the 25% is still your good measuring stick.

There are currently no further questions at this time. I'll turn the call back to Todd Kehrli for closing remarks.

Thank you, operator, and thank you everyone for your interest in DHI Group. If you'd like to schedule a meeting with management, please e-mail ir@dhigroupinc.com or call us at 212-448-4181. This concludes today's call. Thanks for joining and have a great day.